2 Dun and Bradstreet Performance Credit Scores, Dun & Bradstreet D&B rating. The
D&B rating indicates a company’s net worth range based on company financial
statements, as well as a company’s overall financial condition. If a
company’s financial statements are not provided the scores based on company
size industry or other related factors. The D&B rating is a performance score
that’s based on a company’s net worth and overall credit assessment. The D&B rating
is broken into 3 distinct categories, category is assigned based on the amount
of information available on a company. The true definition from D&B is, D&B
rating is a performance score based on a company’s net worth from its financial
statements as well as an overall credit assessment using information in D&B
database. Category 1 is the traditional D&B rating, category 2 is the
expanded credit appraisal, category 3 is the alternative ratings. Category 1 is
the traditional D&B rating which reflects net worth or equity. D&B
calculates this based on the company’s financial statements and payment
experiences or trade lines, both must be in the report to qualify for the
traditional D&B rating. Even if you have payment experiences if no financials are
presents there will be no traditional D&B rating. This score also include the
Composite Credit Appraisal Score. The Composite Credit Appraisal Score
reflects an overall assessment of creditworthiness based on company
payments and financial stability.
If financials are not available for a company, the company falls into the
Expanded Credit Appraisal Category, this is based on the total number of
employees for the business. If Financials nor company size is available,
D&B gives a score in the third category, known as the Alternative Ratings
Category, this is based on the amount of information available in the company’s
report.
Dun & Bradstreet’s Paydex Credit Score. Dun & Bradstreet’s Paydex Credit Score is
the most popular and well known business credit score. It indicates how quickly a
company has paid its bills. The true definition from D&B is, D&B Paydex is a dollar
weighted indicator of a business' payment performance, based on payment experiences
in a company’s D&B file. Another important aspect of the Paydex system of
which most business owners are not aware is a Paydex weighted average score. This
scores gives more weight to the trade accounts that report higher amounts of
credit extended, and less weight to trade accounts that are reporting lower dollar
amounts of credit. The Paydex score is weighted meaning the bigger the bill, the
more wright it can have on the D&B score. This score gives more weight to the trade
accounts that report higher amounts of credit extended and less weight to trade
accounts that are reporting lower dollar amounts of credit. The Paydex score
ranges from 1-100, higher score are lower risk as they predict better
payment performance, any score of 70 and higher D&B defines as a good score, an 80
score reflect prompt payment, a score of 70 reflect payments are paid
within 15 days of terms, scores 50 or lower represent payments being made 30
or more days past terms. Business credit scores are based only on whether the
business pays its bills on time,
a 100 score means to expect payment may come early, 90 means payment comes
within early discount period, 80 means payment is prompt, 70 means
payment comes 14 days beyond terms, 60 means payment comes 21 days beyond terms,
50 means payment comes 30 days beyond terms, 40 means payment comes 60 days
beyond terms, 30 means payment comes 90 days beyond terms, 20 means payment
comes 120 days beyond terms,
UN means unavailable. Higher scores get new business owners, better payment
terms,
lower insurance premium, higher credit limits, due to these benefits, higher
scores make it easier for a business to manage cash flow, be aware that Banks do
pull the Paydex before landing, even though they won’t send you any
disclosure letting you know they did pull your score, as they don’t have to,
having no Paydex score or limited credit will commonly lead to loan denial, for
example, if a lender pulls an incomplete report, they typically will decline the
application, but if a lender pulls a high Paydex score, the chances of being approved
for credit lines from suppliers and lenders greatly increases. Suppliers and
lenders can also receive updates of score changes.